There are too many false breakouts and I want to make sure that the momentum is real and not ending immediately after the price breaks out of the trading range.
My advice would be to watch the market carefully prior to the opening and get a feel for the stock you are trading. I want to make sure you clearly understand the concept of extended trading range so this example utilizes a stock that breaks outside of the 90 day trading range through volatility and price instead of gaps. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. Because day trading is based on intraday momentum, you want to make sure the markets you chose and the strategies you pick have enough momentum to justify your risk.
As you know based on my previous articles the 90 day breakout produces the highest ratio of winning to losing trades.
If the stock or other market you are trading opens with a gap up you can safely enter a market order assuming there’s sufficient volume in the market you are trading. Everything beyond that point is the same except the initial set up can substitute the first gap if the extended trading range is sufficiently strong enough. Here’s a perfect example of an extended trading range breakout followed by a gap immediately prior to entry.
Either way, you cannot enter the trade prior to a confirmation gap that occurs at the opening after the breakout outside of the trading range. THE PAST PERFORMANCE OF ANY TRADING SYSTEM OR METHODOLOGY IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
The best candidates for my trades either gap up to a 90 day high or reach the 90 day high by way of extended trading range. This means if the price broke out of the 90 day range by way of gapping up I will want to see a second gap day prior to my entry.
There’s a formula to calculate the extended range but I will save that explanation for another day. You can see in this example how the stock breaks out and once again gaps up for the second day in a row.
Here you can see how the stocks trading range is almost triple the recent trading range for this stock.
This is the type of strong trading range you want to see breaking out of the 90 day price high.
Binary options trading system
Stock trading demo account uk